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Deal, advisors say, will include not only higher marginal tax rates for wealthy but also curbs on deductions

Advisors are overwhelmingly optimistic that a deal will be reached to avert a fiscal cliff, and that such a deal will include not only higher marginal tax rates for wealthy Americans but will also include curbs on deductions, according to a just-released poll conducted by the Financial Services Institute (FSI).

Nearly all (90%) of the 2,500 independent advisors polled also think a fiscal cliff deal should include both fundamental tax code and entitlement reforms. Over half also responded that the capital gains tax should remain at its current rate of 15%.

Advisors polled said they are also becoming increasingly opposed to the Department of Labor (DOL) reproposing its controversial rule amending the definition of fiduciary under the Employee Retirement Income Security Act (ERISA)--91% opposed in the just-released poll, which is up from 89% in August and 72% in February.

FSI president and CEO Dale Brown (left) said in a statement announcing the poll results that FSI’s independent advisor members “have a unique vantage point on these issues as they work closely with Main Street American investors on a daily basis. While they recognize the need for compromise and reforms in order to make our country financially sound, they also see how many of these significant changes will impact their clients’ ability to save for retirement, pay for their children’s education or care for aging parents.”

While 72% of advisors polled said they believed a deal will be reached and include not only higher marginal tax rates for wealthy Americans but also curbs on deductions, 70% of the advisors were against taxing those earning more than $200,000 at a higher rate.

Indeed, 68% of advisors said that putting a higher tax rate on those earning above $200,000 will dampen investing and savings rates.

Ninety percent of advisors polled also said that a deal avoiding the fiscal cliff should include fundamental tax code and entitlement reform.

As to the economic outlook next year, 52% of advisors believe the U.S. economy will remain flat next year, while 59% said 2013 would be a “neutral” year for equities.

Sixty-nine percent of advisors also said that increased regulatory and compliance requirements, enforced without cost benefit analysis, have resulted in worse service due to less time available to spend with clients.